European capitalism in crisis – fight for a socialist alternative

The following article is based on an introduction by Niall Mulholland to a discussion on European perspectives, which was held at the Committee for a Workers’ International’s (CWI) summer school, in London, on 1 August.

European capitalism is marked by intense crises: economic, social, political, environmental and military.

Due to the reckless policies of capitalist governments across Europe, the human and economic fallout from Covid continues. On top of that, we have the cost-of-living crisis, a hike in inflation, low economic growth and a slide into recession in several countries, and a devastating war on the continent.

And climate change is clearly a matter of life and death not just in the poorer parts of the world but also in Europe. A summer of deadly heatwaves and droughts will most likely be followed by devastating winter floods.

This is the most disturbed period in Europe for decades. The post-Berlin Wall relative ‘stability’ of the capitalist system is at an end.

And now the working class is starting to put its stamp on events, as seen by the rise in industrial action in many countries.

Mass consciousness is being shaken by these processes, by the sense of great instability and the bitter nature of the class struggle.

Many of the political parties and institutions of capitalism are shaken to the core and lack popular legitimacy. Revealing their shrinking social support, capitalist governments increasingly resort to state repression.

They are also deploying ‘culture wars’ and renewed attacks against minorities, immigrants, refugees, and attacking the hard-won rights of women and LGBQT+ communities to whip up reactionary support.

Playing with fire

The ruling elites are playing with fire, as we saw with the explosive Black Lives Matter movement and recent protests in reaction to the overturning of Roe v Wade for the right to abortion in the US.

All these factors are pushing millions of workers and youth to seriously question the profit system and to look for an alternative.

This is still a contradictory process, with mass consciousness lagging behind what has to be done to match the needs of the working class.

The weakness of a socialist alternative that fights resolutely for fundamental change means an even more protracted crisis. The working class will go through lessons of setbacks, as well as steps forward, before the fundamental transformation of society is posed.

Yet social and political explosions are the order of the day. The most sober sections of the ruling class are deeply worried about where things are heading: “We have now moved into a third epoch in history of the post-war global economic order… a new era of world disorder… This new epoch of the world is creating huge challenges. It is possible – perhaps even probable – that the world system will shatter. In such a world, billions of people will lose hope of a better future…” wrote Martin Wolf in the Financial Times.

The economic situation is marked by high inflation not seen since the 1970s and a struggle by working-class people to meet their basic needs.

The supply chain problems caused by lockdowns, the effects of the Ukraine war, and ongoing national and personal debt crises are all causing a ‘perfect storm’ of economic crisis.

Even Europe’s ‘strongmen’ rulers are under pressure. Turkey’s President Erdogan struts around the global stage but faces a brewing revolt at home, where inflation is now running at nearly 80%.

While the economy formally grew by 11%, one third of Turks cannot meet their basic needs – increasing to four-fifths of the population who can ‘barely meet their needs’.

This means not just the poor and working class, but also the middle classes are being hammered.

In northern Europe too, the cost-of-living crisis is felt keenly. The IMF revised downwards growth for the Eurozone from 2.6% to 1.2% for 2023.

Possible further cuts in gas supplies from Russia could see another 1.3% fall in the Eurozone in 2023 to “near zero growth”.

Germany, the economic powerhouse of Europe, expects 1.2% growth in 2022 and just 0.8% in 2023. German inflation hit 8.5% at the end of July, with a surge in the price of food.

And there’s no relief outside the Eurozone. UK inflation is running at over 10% and the economy is heading towards recession at the end of the year. The UK has the lowest growth of the G7 countries, expected to be at 0.5%.

The economic crisis of British capitalism is the underlying reason for the crisis in the Tory party. Three Tory prime ministers have been removed by their party in just six years.

A major showdown with unions is taking shape, as a series of workers take industrial action or plan to over pay and conditions.

Deep economic crisis and political upheaval are spreading across the continent. Rising inflation, low growth/recession and burgeoning debt are huge burdens on the economies. Rising interest rates are piling pressure on millions of mortgage payers.

The European Central Bank admitted it is a “delicate exercise” to know how to raise interest rates to fight inflation without causing a new Eurozone debt crisis.

In the words of the economist Nouriel Roubini: “The next crisis will not be like its predecessors… Today, we are heading for a combination of 1970s-style stagflation and 2008-style debt crises – that is, a stagflationary debt crisis… The space for fiscal expansion will also be more limited this time. Most of the fiscal ammunition has been used, and public debts are becoming unsustainable.”

Instability is most pronounced in Italy, which is one of the Eurozone’s largest economies. Italian public debt is nearly at 150% of GDP.

The Italian ruling class and Brussels demand deep public sector cuts but this helped trigger a political crisis in the ruling coalition – along with differences over Ukraine – and the fall of Prime Minister Draghi.

In the absence of a credible, mass left alternative, the September elections look likely to return an unstable populist, right-wing government, including the Brothers of Italy – descendants of the neo-fascist MSI.

This ‘whip of counterrevolution’ and any attempt to impose cuts against the working class will provoke massive social and industrial explosions.

Italy is one of the weakest links in the Eurozone and EU and hastens the centrifugal tendencies.

Collapse of the ‘centre’

Another feature of this period is the collapse of the so-called political ‘centre’.

President Macron has lost his majority in the French parliament. This considerably weakens his attempts to take on the rights and conditions of the working class, as he intended.

Despite his political flaws, Jean-Luc Mélenchon’s vote of 21.95% in the French presidential elections shows the potential for the left and the mood of anger towards Macron. This is a harbinger of big class battles to come, with the shadow of the revolutionary events of May 1968 looming over today.

Even the populist ‘strongman’ of Europe, Viktor Orbán, in Hungary, faces growing discontent at home, as the country faces a steep economic downturn.

Orbán is pulled in two directions: seeking closer ties and energy supplies with Moscow, while trying to get $15 billion worth of EU pandemic recovery funds, which are dependent on fighting corruption and weaning off Russian energy!

Even where economies are growing, political polarisation and major upsets are a feature, as we see in Ireland.

Sinn Féin is set to become the largest party in the next general election, overtaking the two traditional parties of Irish capitalism.

Although Sinn Fein long ago jettisoned its socialist veneer, it is gaining from apparently radical policies, particularly on housing.

Sinn Féin’s pro-market policies mean it will not deliver the goods for working-class people, and it will be tempted to divert attention onto a ‘border poll’.

The national question will grow as an issue across Europe as the crisis of capitalism deepens.

It has become more complicated in a period of capitalist crisis, as we see with the sectarian tensions around Brexit and the ‘Irish Sea border’.

It can be reasserted in Catalonia and other parts of Spain and in other parts of Europe.

The Scottish National Party has announced new dates for a referendum on Scottish independence but will conduct a struggle in a half-hearted way as befits such a pro-capitalist party.

This will not satisfy the Scottish working class and will only enrage the British ruling class.

The national question can embolden sections of the working class to take on the oppressive capitalist state and ideology. But with the leadership in the hands of petit-bourgeois nationalists, it can have dangerous consequences for working-class unity.

Renewed nationalist and ethnic tensions between Kosova and Serbia are a warning of what can develop unless a strong left alternative is developed with a sensitive, independent position on the national question.

We see the horrific consequences of the lack of a mass socialist movement starkly in Ukraine and Russia.

The working class in these countries is largely prostrate, without enough organisation and leadership to intervene decisively to cut across war.

The bloody conflict is dragging on, now in its seventh month, at a huge cost to human life and resources.

Russian forces are grinding away, seizing territory in the east and south east. Kiev claims to be ‘regaining territory’ in the south and has conducted missile attacks on Crimea.

While the European powers and the US have pumped billions into the Ukraine war effort and beefed up European militarisation plans, they also fear the consequences of the conflict spreading and dragging in other countries.

The European powers and US are also expressing differing emphases on the war aims and ‘acceptable outcomes’.

The UK, the Baltic States and Poland take a hard-line pro-Kyiv position. France and Germany appear more open to accepting some territorial losses.

Germany is particularly prone to the wider fallout from the Ukraine war. The German economy could enter a slump should Russia cut gas deeply or completely, hitting both industries and homes.

The war and sanctions have hit Russia hard but it cuts both ways. Gas prices have accelerated, by 25% at the end of July, when Russia cut gas supplies to the West.

The deal made between Russia and Ukraine over releasing grain supplies shows that the European powers and the US are worried about the social and political consequences of severe food shortages and price rises in Africa and at home.

The first flushes of war fever engendered by the European powers and US are now a fading memory. Ukraine has not served as a longer-term distraction from problems at ‘home’, as the European elites hoped.

The awakening of the organised working class is a common feature across Europe. Strike levels are growing and having an impact on mass consciousness.

Young people are getting organised in the workplaces, fighting terrible precarious conditions and zero-hour contracts.

This will start the process of shaking up the unions. Fresh layers of union militants will be very open to socialist ideas and programme, including for combative and democratically run unions.

But the working class cannot fight with one arm tied behind its back – it also needs political representation. Yet the left political formations, in the main, have shown their extreme poverty of ideas and fatal compromises with pro-capitalist parties.

Podemos, which is in government with the social-democratic PSOE, in Spain, is carrying out anti-working class measures. A massacre of immigrants trying to reach a Spanish enclave from Morocco is a bloody stain on the record of Podemos.

Syriza, in Greece, and Corbynism, in Britain, went down without a serious fight, which led to sections of the left becoming disillusioned. But others are mulling over the bitter lessons and can return to activity if a viable left political vehicle is on offer.

The assembling of new mass working-class parties is a complicated process. The CWI in Europe aids the process along where we can, participating in, for example, the Trade Union and Socialist Coalition (England, Scotland and Wales), Cross Community Labour Alternative (Northern Ireland) and Jean-Luc Mélenchon’s left formations (France).

The CWI can play a pivotal role in intervening in events and rebuilding support for the ideas and methods of revolutionary socialism.

There is a marked interest in socialist and Marxist ideas among sections of youth and workers. By audaciously defending the Marxist ideology and programme and method, the CWI can be confident of growing in Europe.